Business

European markets end volatile week on a Draghi high

July 27 - European stocks, bonds and the euro all rise, boosted by ECB president Mario Draghi's pledge to do whatever it takes to save the euro. Jamie McGeever reports.

TRANSCRIPT +

European markets continued to bask in the glow of ECB President Mario Draghi's pledge to do whatever it takes to save the euro.
No more fearful looking at their trading screens through their fingers, for holders of Spanish and Italian bonds.
Prices soared again, pushing these countries' borrowing costs, or yields, sharply lower. Spain's benchmark yield fell below 7 percent, and is down a full percentage point from the historic high earlier this week.
According to Ashraf laidi, chief strategist at City Index, Draghi can't afford NOT to follow his words with actions. So the rally could have further to run:
SOUNDBITE: Ashraf laidi, Chief Strategist at City Index, saying (english):
"They said they would not buy bonds and they did it in May 2010. But they never hinted towards a big LTRO and never delivered. They never hinted to something big and they never delivered."
It was a similar story across the continent's stock markets, which ended a volatile week on a high.
Not everyone is convinced though. Gustavo Bagattini, economist at RBC Capital Markets, thinks the boost to markets will be short-lived.
SOUNDBITE: Gustavo Bagattini, Economist at RBC Capital Markets, saying (English):
"I think we have to remember the context in which we're operating, it's similar to last year when they did reactivate the securities markets program, the bond buying program where you do have low volumes and small purchases can move the markets are up quite a bit. But in our view, that's the program that has no clearly defined objective, they had no determination in terms of doing this, so it's really a textbook example of how not to conduct a Central Bank intervention."
All eyes, then, on next week's ECB policy meeting in Frankfurt
Jamie McGeever, Reuters.

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